In the first two parts (here Part 1; here Part 2) of our three-part series we explained what preliminary considerations a testator should make and how he or she can best implement this concept. In this third part we explain what the testator can do if a planned inheritance/gift is no longer to take place during his or her lifetime - for whatever reasons.
The testator has made his or her will, whether in private writing or with a notary. Suddenly, life circumstances change. The partner dies or the marriage is divorced. The children turn their backs on the testator. The heirs once appointed are no longer suitable from the testator's point of view to be available as heirs, usufructuaries or legatees. In this case, the testator can simply change his or her will, provided he or she has not bound himself or herself in this will, for example, to his or her spouse.
The case becomes more difficult if, in the context of anticipated succession or also with regard to the wise assertion of tax allowances, gifts made during one's lifetime prove to be problematic in retrospect. For this case, the law offers rights of recovery, which, however, are regularly insufficient to comply with the will of the testator (and this still during his lifetime). In these cases, it makes sense for the testator to have recourse to the contractual rights of recovery granted in a gift contract.
Statutory rights of recovery
If the testator has not built in any contractual rights of recovery or reversionary clauses when making gifts during his lifetime, he is generally considered to be insufficiently protected as a donor. This is because, according to the law, these rights of reclamation only refer to essentially three cases, the non-fulfilment of a condition, the impoverishment of the donor or in the case of gross ingratitude of the donee towards the donor. In a possible lawsuit, the testator/donor must present and prove these individual conditions. In particular, the well-known "gross ingratitude" can only be proven under very narrow conditions (e.g. if the donee seeks to kill the donor). It is therefore strongly recommended to include contractual rights of recovery in a gift contract.
Contractual rights of recovery
There are a number of good reasons which should enable the testator/donor to reclaim what has been given after a corresponding deed of gift has been drawn up. If this concerns real estate, this possible claim to reclaim should be secured by a corresponding priority notice in section II of the land register.
The deed of gift should ensure that the donor has a right of recovery if the donee wishes to sell or encumber the donated property. Similarly, the testator should get his or her property back if foreclosure measures are taken against the property due to debts incurred by the donee. Likewise, a clause is advisable whereby the donor can reclaim the property if the donee predeceases and there is thus a risk that close (unpopular) relatives of the donee will receive the property. Since the principles of party autonomy (testamentary freedom) apply to such clawback clauses, the testator/donor can link his claim for clawback to a wide variety of events, such as non-completion of a (specific) education of the donee, occurrence of circumstances with the donee such as drug use, criminal liability for a wide variety of offences, membership in a cult, etc.. It is highly recommended to include clauses in some notarial contracts, which unfortunately have not yet become standard, which form an element of reclaim if the transfer fails from a gift tax point of view (tax clause). Suddenly taxes are incurred that none of the parties had foreseen. This may have something to do with valuation issues or simply wrong advice.
The testator also does well to include a so-called two-stage clawback model in his contract. This means that the claim for recovery does not arise automatically when the corresponding event has occurred. Instead, it only arises when the corresponding event has occurred and the testator has made a corresponding declaration. It is then up to the testator to leave the gift in place or to reverse the gift.
Bequeathing real estate the right way is not that difficult. If you make the necessary arrangements while you are still alive, you can always change your mind as a testator. That's a good feeling after all.
Düsseldorf, 12 May 2021
Author: Dieter Jasper